Rachel Reeves has announced £4.8bn welfare cuts in the Spring Statement.
Those on benefits will see their rates cut and eligibility harder to prove.
Rachel Reeves has announced the Government will cut the welfare bill by a total of £4.8bn as she delivered her Spring Statement.
The Chancellor blamed increased global uncertainty as Britain’s growth forecast was cut from two per cent to one per cent by the Office for Budget Responsibility (OBR).
Rachel Reeves told MPs: “Today, the OBR have said that they estimate the package will save £4.8bn in the welfare budget reflecting their judgements on behavioural effects and wider factors.
“This also reflects final adjustments to the overall package, consistent with the Secretary of State’s statement last week, and the Government’s Pathways to Work Green Paper.
“The Universal Credit Standard Allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30 while the Universal Credit Health element will be cut by 50pc and then frozen for new claimants.”
She said that “welfare spending as a share of GDP will fall between 2026-27 and the end of the forecast period”.
Work and Pensions Secretary Liz Kendall unveiled plans to “fix the broken benefits system” and tackle what she described as “perverse incentives” driving welfare dependency.
The changes will primarily affect those with less severe disabilities, who stand to lose approximately £3,500 annually.
The measures are part of a broader strategy to address rising welfare costs, with disability benefits spending projected to increase significantly in coming years.
Kendall said the measures are expected to reduce welfare spending by more than £5bn a year by 2029-30.
However the Office for Budget Responsibility (OBR) has rejected the Treasury’s £5bn welfare savings estimate, valuing the cuts instead at £3.4 billion — a discrepancy that is likely to deepen tensions between Labour and the independent fiscal watchdog.
The rift comes as Reeves prepares to announce a further £500 million in welfare savings, a move expected to fuel growing unease among Labour backbenchers.
The government is set to publish an impact assessment showing that changes to Personal Independence Payments (PIP) will affect around one million people, while reforms to Universal Credit incapacity benefits will impact a further two million claims. The analysis will reveal that the poorest will lose the most, though all income levels will be affected.
Hannah Peaker, deputy chief executive of the New Economics Foundation, criticised the move, saying: “It is extraordinary to think that the chancellor has been pushing through cuts to benefits that provide a lifeline to millions of ill and disabled people without a clear understanding of the impact.”
She warned the cuts would drive people into poverty and poorer health, ultimately damaging the economy.
Rachel Reeves Spring Statement
Parliament UK
Separately, public health experts writing in The BMJ cited previous welfare reforms linked to harm. Professor Gerry McCartney of the University of Glasgow said cuts since 2010 have “fundamentally harmed” UK public health and warned that further reductions could lead to “more premature deaths”.
This comes as the government faces a projected increase in sickness and disability benefits spending, forecast to hit £70bn annually by the end of the decade.
Officials have described the current level of PIP spending as “unsustainable” and potentially putting the entire welfare system at risk.
The OBR’s assessment will be crucial due to uncertainties about potential savings.
The changes will primarily affect those with less severe disabilities who currently qualify for PIP through accumulating lower scores across multiple activities.
Around one million claimants will lose their entire payment of approximately £70 per week, equivalent to £3,500 annually. Unlike some Universal Credit changes that mainly affect future claimants, the PIP reforms will impact existing recipients.
The government has not yet released precise figures on who will be affected, though they likely have this information. The changes are scheduled to take effect from November 2026.
The reforms appear to be designed to address budgetary concerns rather than representing fundamental welfare reform.
